As noted in our previous alerts regarding the American Recovery Plan Act (ARPA) COBRA subsidies and return to work issues, employers have until May 31, 2021, to notify “Assistance Eligible Individuals” of their potential right to subsidized COBRA coverage during the six-month period from April 1 to September 30, 2021 and potential right to enroll or re-enroll in COBRA coverage.
Continue Reading Reminder – ARPA COBRA Notice Deadline Approaching; IRS Provides Much-Needed Guidance
IRS Temporarily Relaxes Cafeteria Plan Midyear Election Change and FSA Rules and Provides Other Employee Benefit Relief
As part of an ongoing effort by the IRS to provide employers and employees with flexibility during the COVID-19 pandemic, the IRS recently issued notices 2020-29 and 2020-33, providing relief with respect to “cafeteria plans,” health flexible spending accounts (Health FSAs), dependent care assistance programs (DCAPs), and high deductible health plans (HDHPs). The relief applies to all employees who are eligible to participate in such plans, regardless of whether they are actually affected by COVID-19. Below is a summary of key aspects of the guidance and practical issues to consider.
Continue Reading IRS Temporarily Relaxes Cafeteria Plan Midyear Election Change and FSA Rules and Provides Other Employee Benefit Relief
IRS and DOL Issue Sweeping Deadline Relief for Benefit Plan Participants and Plan Sponsors
In accordance with emergency powers granted in the wake of the COVID-19 pandemic, the Internal Revenue Service (IRS) and US Department of Labor (DOL) recently issued guidance temporarily extending a number of benefit plan-related deadlines and providing other relief for participants and plan sponsors having difficulty complying with these requirements during the COVID-19 pandemic. Below is a summary of the guidance, which is posted in the Employee Benefits Resources Section.
DOL and IRS Final Rule
The May 4, 2020, Final Rule generally suspends certain benefit plan deadlines for the duration of the “Outbreak Period,” which is an open-ended period beginning March 1, 2020, and ending 60 days after the end of the COVID-19 national emergency. The relief under the Final Rule is generally aimed at participants and beneficiaries, and mostly affects group health plans.
Employee Benefits Issues — Coronavirus
As the coronavirus continues to spread within the United States, employers are dealing with a number of issues with respect to workforce, labor, and employee benefits. The following are common questions regarding employee benefits issues that employers may face sooner rather than later. We will update this list of questions and answers as the situation unfolds.
Q1: If an employer furloughs employees, are they still eligible for group medical plan coverage?
It depends. The terms of the group medical plan document or applicable certificate of coverage will dictate whether employees who are no longer “actively at work” may continue active coverage. Most plans provide that an employee who is not “actively at work” may only continue coverage for a designated period of time. After the expiration of this designated period, active coverage will be terminated and the covered employee will be eligible for COBRA.
Employers that maintain “self-funded” plans may have more flexibility, as they may amend their plans to waive eligibility conditions and allow furloughed employees to continue active coverage. (Note that some employers with fully insured plans may be able to work out similar arrangements with their insurance carriers.) Employers with self-funded plans that want to waive actively at work requirements or extend coverage while employees are on leave or furlough need to obtain the consent of their reinsurance carriers to avoid any coverage issues.
Finally, employers utilizing an Affordable Care Act (ACA) lookback and stability approach to determine full-time status for health plan purposes should consider whether affected employees are in a stability period that would result in continued eligibility for the duration of the stability period. Reduced hours in 2020 might impact such employees’ full-time status for the next stability period (e.g., 2021 for plans using a calendar year stability period). Employers should also consider whether to provide relief for such employees in future stability periods.
Q2: If an employee is on leave because he or she is experiencing coronavirus-like symptoms, is the employee eligible for group medical coverage?
It depends on whether the employer sponsoring the plan is subject to the Family and Medical Leave Act (FMLA). If so, then the leave is likely protected by the FMLA, meaning that continued group medical coverage must be provided for the period of FMLA leave, and the employer’s policies regarding payment for coverage during FMLA-qualifying leaves will apply. For employers that are not subject to the FMLA, applicable policies and procedures regarding continued coverage during periods of sick leave will apply, as well as the plan terms and ACA full-time measurement and stability issues noted in Q1 above.
Federal Agencies Provide Benefit Plan Relief to Victims of Hurricanes Harvey and Irma
On August 25, 2017, and September 10, 2017, President Trump declared major disasters in Texas and Florida due to Hurricanes Harvey and Irma (the “Hurricanes”). Following the declarations, the Internal Revenue Service (“IRS”), the Department of Labor (“DOL”) and the Pension Benefit Guaranty Corporation (“PBGC”) issued relief for affected individuals and entities. The IRS is postponing certain tax filings and payment deadlines for taxpayers who reside or work in the disaster area. The relief also provides qualifying individuals with expanded access to their retirement plan assets to alleviate hardships caused by the Hurricanes. Additional IRS guidance allows donation of employer-paid leave to charitable organizations aiding victims of the Hurricanes.
The DOL is providing additional relief to employers and plan fiduciaries, in the form of deadline leniency and relaxation of fiduciary requirements for benefit plans that have compliance lapses resulting from the Hurricanes. Finally, the PBGC is waiving certain penalties and extending certain filing deadlines. Below is a summary of the relief provided by the IRS, DOL, and PBGC. Additional relief is sure to follow for victims of Hurricane Maria in Puerto Rico and the U.S. Virgin Islands.
Continue Reading Federal Agencies Provide Benefit Plan Relief to Victims of Hurricanes Harvey and Irma